Air­lines in In­dia High cost, low fare syn­drome

The IATA Agents As­so­ci­a­tion Of In­dia (IAAI) has been fight­ing tooth and nail against the com­mis­sion is­sue and ad­dress­ing con­cerns of the agents. speaks to the as­so­ci­a­tion dis­cussing FDI and their en­deav­ours.

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IAAI’s re­cent ac­com­plish­ments in­clude the for­ma­tion of a com­mit­tee for Strate­gic Al­liances and Part­ner­ships with an idea to build bridges and forge mean­ing­ful part­ner- ships with var­i­ous stake­hold­ers in the travel, tourism and hos­pi­tal­ity in­dus­try.

“The Board of Di­rec­tors meet­ing held on Septem­ber 29, 2012 in­ducted mem­bers with vast ex­pe­ri­ence and knowl­edge in the travel in­dus­try to spear­head the new strate­gic al­liances and part­ner­ship com­mit­tee and to help de­velop mean­ing­ful re­la­tion­ships,” says Biji Eapen, Pres­i­dent, IAAI.

Analysing the avi­a­tion sec­tor, the in­dus­try’s back­bone from an agent’s point of view, Eapen ex­plains, “The avi­a­tion in­dus­try in In­dia to­day gives rise to a feel­ing of deja vu. The sce­nario looks pretty much the same, as it ex­isted in late for­ties and early fifties when there were quite a few car­ri­ers oper­at­ing air trans­port ser­vices but al­most all were mak­ing losses and look­ing up to the Gov­ern­ment for as­sis­tance. How­ever, the air­lines can­not run for too long if they are mak­ing losses. The In­dian air­line in­dus­try is suf­fer­ing from the high cost, low fare syn­drome. The oper­at­ing cost has been mov­ing up­wards in­ces­santly due to rise in main­te­nance cost, staff salaries, fuel cost, RNF charges, air­port charges and taxes. But the air­lines are un­able to raise the fare lev­els suf­fi­ciently to re­cover the full cost be­cause of fear of los­ing traf­fic to their com­peti­tors. The re­sult is that there is un­der-re­cov­ery of cost de­spite good load fac­tors and hence losses. The low fare cul­ture, which was ini­tially hailed as a boon for the in­dus­try, seems to have be­come its bane.”

Kuku S. Ku­mar Di­rec­tor- North­ern Re­gion, IAAI

Biji Eapen Pres­i­dent, IAAI

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